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Former North Carolina senator and Democratic presidential candidate John

Edwards is reportedly likely to face federal indictment for using campaign

funds to cover up his extramarital affair.>

Hochul; John Edwards; Crime>

CHRIS MATTHEWS, HOST: There‘s no saving Private Ryan.

Let‘s play HARDBALL.

Good evening. I‘m Chris Matthews in Washington. Leading off tonight:

Wakeup call. Now we know why Republican strategists convinced candidates not to support the Republican plan to phase out Medicare. It‘s a political death warrant. Last night‘s defeat of a Republican in a conservative New York state district is because of one thing, the GOP plan to kill Medicare.

Now House Republicans have some explaining to do, squaring their votes for the “Kill Medicare” plan with a public that actually likes Medicare. And right now, Democrats are going to put Senate Republicans in the same corner, forcing them to vote up or down on Ryan‘s plan.

Also, it now looks as if John Edwards is facing perhaps federal indictment. He‘s accused of using campaign funds to cover up his extramarital affair. Is he guilty, or is this simply a stretch of the law?

Plus, diamonds are forever. Newt Gingrich being deep in debt to

Tiffany‘s threatens to become a killer story about character, his

character. What kind of a guy owes a quarter million bucks to pay diamonds

pay for diamonds?

And how‘s this for another Mitt Romney flip-flop? In 2009, Romney called President Obama‘s auto rescue plans tragic and a very bad circumstance for the country. Now that they‘ve proven a success and Chrysler‘s paid back all of its loan, a Romney spokesman says it was Romney‘s idea to grant the loan. Doesn‘t this guy realize we have videotape of what he said before? Flip-flopping, that‘s Romney‘s game.

We start with the Senate vote on the Republican “Kill Medicare” plan and the Republican defeat in the New York 26th congressional race. Congressman Steve Israel is a Democrat from New York and chairman of the Democratic Congressional Campaign Committee. And Errol Louis is a political host for New York One up in New York.

Congressman, I thought that the Democrats even came close in this race

this is Jack Kemp‘s old seat. This is jack Quinn‘s old seat. These are Republicans. This is now your party‘s seat. What happened up there, up near Buffalo?

REP. STEVE ISRAEL (D-NY), DCCC CHAIR: Well, three things happened, Medicare, Medicare and Medicare. We said on the first day that the gavel came down on the Republican plan to terminate Medicare benefits in order to fund tax cuts to big oil companies that we would hold them accountable, we‘d them accountable every day, we‘d hold them accountable in every district. We took that fight to New York 26, and we won and Medicare won.

MATTHEWS: Now, did Kathy Hochul, who just won the race up there—she‘s a congresswoman-elect now—did she do what you told her to do? Is this, in other words, a template, a role model, for what you could do in winning back, say, 25 seats next year? Twenty-four seats would be enough to get control of the House again.

ISRAEL: She didn‘t do what we told her to do, she did what she wanted to do. One of the reasons she got into this race is she couldn‘t stomach these Republican plans to terminate Medicare while giving tax cuts to the richest oil companies. That‘s one reason she got in this race.

From day one, she defined herself as an independent Democrat who would vote against this Medicare scheme and that is why she won. And I‘ll say one other thing. She won not by attracting just Democratic votes, she won independents and she got so many Republican votes.

And so this is a really good barometer for what‘s happening throughout the country. Independent voters left Democrats in the 2010 congressional election. We had them in 2006. We had them in 2008. These are the Bucks County Democrats that you talk about so much.

MATTHEWS: Yes, I know all about them.

ISRAEL: And they came back to the Democrats in New York 26, and that‘s why we‘re going to continue creating this contrast.

MATTHEWS: Well, I buy completely argument. I don‘t agree with the Democrats on everything, but I‘ll tell you, when it comes to Medicare, the minute you turn 65, you like Medicare. I don‘t care who you are, Republican, middle—or middle of the road or not.

Here‘s Representative-elect Kathy Hochul. She continued to take aim at Ryan‘s Medicare overhaul plan in her victory speech. By the way, stop calling it the Ryan plan. It‘s the Republican plan. The entire Republican caucus in the Congress voted for it. Is‘s their bill, as a party. Let‘s listen.

(BEGIN VIDEO CLIP)

KATHY HOCHUL (D-NY), REPRESENTATIVE-ELECT: We can balance our budget the right way, and not on the backs of our seniors.

HOCHUL: If I have my way, and I hope I do, we will keep the promises that we made to our seniors, who spent their entire lives paying into a Medicare system so it would be there when they needed it. It that‘s simple.

(END VIDEO CLIP)

MATTHEWS: You know, Erroll, I‘m looking at what possibly could be the death rattle of the moderate Republican Party, the Northeast we all—I grew up with, which is a moderate party of Nelson Rockefeller, Jack Javits and people like that, and all over Pennsylvania (INAUDIBLE) lots of moderate Republicans elected year after year now.

Now they‘re all running for the hills—Olympia Snowe, Susan Colin, Scott Brown, the new guy from Massachusetts, running like hell away from this thing. You only got what, four Republicans in New York state, the whole state now, and this is what, you‘re down to three now, right?

ERROL LOUIS, NEW YORK ONE: Well, yes, pretty much. I mean, but to be fair about it, once you go outside of New York City, it‘s actually roughly the same numbers. You got about four or five Democrats, four or five upstate Republicans, although this one, of course, makes a big difference.

I think the thing they also have to be very concerned about, frankly, Chris, is that this was a suburban district. This wasn‘t—you know, it‘s near Buffalo, but it‘s outside of Buffalo and it runs up to the outskirts of Rochester.

MATTHEWS: Yes.

LOUIS: So this is a suburban district. It‘s 93 percent white. It had a decisive Republican registration advantage and a lot of independents.

This is the kind of district that they cannot afford to lose, the

Republicans, going into the 2012 election. They can‘t drop too many like this. And in a lot of ways, it‘s more like a Midwestern seat than what people would think of as New York.

MATTHEWS: Do all the Democrats have the ability to focus on this one issue that exposes the Republican as an uncaring party that doesn‘t connect with real people, and I mean middle-of-the-road people? Have you got your other members ready to run on this next year?

ISRAEL: Oh, there‘s no question that Democrats are Democrats because of our defense of Medicare, because we—our message is that we will support Medicare, and we don‘t believe that you cut Medicare in order to fund tax cuts for big oil companies. That was Kathy Hochul‘s message, and if she could win with that message in New York 26, then we can win almost anywhere. Chris, there are...

MATTHEWS: Except in Texas.

ISRAEL: Well, I‘ll tell you what...

MATTHEWS: You can‘t go where they have oil, obviously.

ISRAEL: Maybe you‘re right about that.

MATTHEWS: You can‘t go down there where they do want to have the oil industry. They‘re not worried about Medicare.

ISRAEL: They‘re...

MATTHEWS: Let‘s take a look, Congressman—here‘s Paul Ryan on “MORNING JOE,” our colleague, reacting to the news that Medicare basically cost that party a seat up there, your party—the other party, rather, in New York 26. Let‘s listen.

(BEGIN VIDEO CLIP)

REP. PAUL RYAN ®, WISCONSIN: There is a Medicare story to be told here, and the Medicare story that‘s being told here is the president and his party have decided to shamelessly distort and demagogue Medicare. So we‘re going to see a new “Mediscare” reform campaign here. If you can scare seniors into thinking that their current benefits are being affected, that‘s going to have an effect. And that is exactly what took place here. It can be a powerful political weapon.

MATTHEWS: Errol, it looks to me like he‘s gone back to a very narrow defense. He‘s saying, yes, we‘re out to screw Medicare people, but only later.

(LAUGHTER)

MATTHEWS: We‘re not going to hit the people that are already retired.

You hear how he said it, only current retirees? That was his best defense. We‘re only going to get them as they‘re coming up into retirement. We‘re going to nail them then.

ISRAEL: Yes, he‘s going to have to do a little better than that because people who are turning 55 -- and that‘s really who would be affected by this stuff—there are a lot of people who are in their 50s, and frankly, I‘m not that far away from it—you start thinking about where you‘re going to spend your retirement years. You start thinking what the heck did you have money taken out of every paycheck of your adult life for?

MATTHEWS: When did you first work? I worked when I was 14 or 15. I‘m sure I had a paper route, maybe younger. Actually, it was much younger than that. I‘ve been paying into this system at least since that age, and you, too.

LOUIS: Exactly. Exactly.

MATTHEWS: So you tell a guy or a woman at 55, Oh, by the way, that thing you‘ve been paying into since dawn, since you were working as a paper boy or whatever, it doesn‘t count anymore. You now got to now buy—get your Borders gift certificate and try to buy some health care with it.

LOUIS: He doesn‘t want you to call it a voucher, but of course, that‘s—that‘s pretty much what it is that he‘s talking about.

MATTHEWS: Yes, it‘s a gift certificate. It‘s worth about one half or one third. Congressman, you‘re the expert. What percentage of an actual benefit—of a premium would the Ryan plan pay for? Say you‘re 80 years old and you‘re trying to buy health insurance. What would—what percentage would it actually cover?

ISRAEL: It‘s going to cost you about $6,000 extra, according to the non-partisan Congressional Budget Office. So under the Republican plan, if you are earning over a million dollars, you get a $100,000 tax cut. But if you‘re a senior citizen, you get a $6,000 medical bill. And that‘s why voters in New York 26 and throughout the country rejected that Republican plan.

MATTHEWS: Let‘s take a look at Pawlenty here. I want to look at how the Republican candidates for president are going to deal with this because they got to either run from it or run with it. Here‘s Republican presidential candidate Tim Pawlenty, Tim Paw, when he was asked if he‘d support this Republican plan to kill Medicare. Let‘s listen to his interesting answer.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Would you sign the Ryan budget plan?

TIM PAWLENTY ®, FMR. MINNESOTA GOV., PRESIDENTIAL CANDIDATE: Well, I‘m going to have my own plan. I do applaud Congressman Ryan‘s courage to step up and actually put a plan on the table. So now we have a relatively newer member of Congress from Wisconsin leading the discussion, when the president of the United States should have that leadership role. Unfortunately, President Obama refuses to do it, and I don‘t believe he has the courage do it.

(END VIDEO CLIP)

MATTHEWS: Well, he didn‘t have the courage to endorse it, did he, Congressman. I didn‘t hear—I didn‘t hear the former governor of Minnesota endorse this Republican plan to kill Medicare.

ISRAEL: Look, you‘re going to see—they are in meltdown right now. Half of them want to double down on ending Medicare, half of them want to retreat. They are in disarray and they‘re going to continue to be in disarray. I just wish that they would learn the lesson of New York 26, just withdraw this plan to terminate Medicare. Let‘s have an honest discussion about reforming Medicare, strengthening Medicare, improving Medicare. But ending Medicare is non-negotiable for Democrats.

MATTHEWS: Let me talk to Erroll on this. You know, Michele Bachmann, our good friend from Minnesota, got the geography wrong. She said that Lexington and Concord were somewhere up in New Hampshire. Actually, it was in Boston, up there. I think Lexington and Concord may be the New York 26. This is going to be a shot heard ‘round the world. My thoughts. Yours, please?

LOUIS: Oh, yes. Oh, sure. No, no. Definitely heard around the

country. And the reality is, look, there was another candidate who was in

the race, a Tea Party candidate who wanted to talk about free trade. The

Republican Party—less on the Democrats, but definitely the Republicans -

they have to figure out what their priorities are going to be, what their platforms are going to be and what they‘re going to run on with regard to free trade, with regard to entitlements, with regard to the federal debt ceiling. They‘ve got to make up their mind.

This is an important piece of information to help them make up their minds. It‘s not going to sell everywhere.

MATTHEWS: What do you make of that, Congressman? The Tea Party seems to like the Republican Party until they realize what they stand for. They stand for cutting programs the Tea Party people like, like Medicare.

ISRAEL: You‘re right. In fact, the polling that came out of New York 26 showed us that independent voters and conservative voters were drawn to Kathy Hochul and driven to vote for Democrats based on the one issue of Medicare. And that is why Medicare has become such a galvanizing issue. It cuts across party lines and it is inuring to the benefit of Democrats.

MATTHEWS: Well, when Tea Partiers come out and say cut government spending, what are they talking about, Errol? It seems like they‘re not talking about government spending that affects them.

LOUIS: Well...

MATTHEWS: Like Medicare.

LOUIS: But that‘s universal, though, Chris. Everybody wants the...

MATTHEWS: Well...

(CROSSTALK)

LOUIS: ... just don‘t cut my subsidy, don‘t cut my mortgage interest deduction, don‘t cut my student aid, don‘t cut what affects me. The problem with Medicare is that it affects absolutely everybody sooner or later, and so that‘s not the right one to start with, if you really want to chop the federal budget. It‘s just not—politically, that‘s not the right one to start with.

MATTHEWS: OK, I assume now this is a voting issue. It serves as a voting issue. Congressman Israel, a simple question to you. You‘ve got the job of doing it. Can you win back the House on this issue?

ISRAEL: Yes, we can win back the House on this issue. We said from day one we‘re going to hold them accountable. We took the fight to one of the toughest Republican conservative districts in America, and Kathy Hochul won in that district. If we can win in that district, we can win in many more.

Let me give you one statistic. There are 97 congressional districts in the country right now that have a Republican member of Congress, but the districts are more moderate and have a higher Democratic performance than New York 26. Now, I‘m not saying we can win 97 districts. That would be preposterous. I‘m not even saying we can compete in all 97. I am saying there are 97 Republican members of Congress who lost sleep last night because of their Medicare vote.

MATTHEWS: Well, I‘d say if you get 97 seats, you‘re going to be Speaker of the House.

(LAUGHTER)

MATTHEWS: Thank you very much, Congressman Steve Israel...

ISRAEL: Thank you.

MATTHEWS: ... who‘s the champion of this effort. Congratulations. Errol Louis, thank you—I called you Earl Louis. Earl Wilson is a great columnist. Thank you very much, Errol Louis.

LOUIS: Thank you.

MATTHEWS: Coming up: The justice Department plans to indict John Edwards on criminal charges possibly within days. It has something to do with that affair he had. He‘s under investigation for allegedly violating campaign laws and using campaign money to try to cover up an extramarital affair. We‘re going to get to this. It‘s a bit complicated, but it ain‘t complicated when you‘re in trouble. You‘re just in trouble.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Well, as we all know, Florida‘s the biggest presidential battleground state shaping up, and here‘s a good poll number potentially for President Obama. Florida‘s new Republican governor, Rick Scott, is toxic. I always thought this guy was toxic. Look at this. His approval rating is 29 percent and he just got into office. Imagine what it‘s going to be in three years. That‘s according to a new Quinnipiac poll -- 29 percent for the new governor.

You can bet that the Obama campaign will tie whoever wins the Republican nomination for president to Governor Scott down in Florida. This guy is not cool.

MATTHEWS: Welcome back to HARDBALL. John Edwards could be facing big trouble. The Department of Justice has given the OK for prosecutors to begin—or at least bring criminal charges against the former senator and presidential candidate. He‘s alleged to have broken campaign finance laws in covering up his affair with Rielle Hunter, the filmographer who worked on his campaign.

Joining me right now is Salon‘s editor-at-large, Joan Walsh, and MSNBC political analyst Richard Wolffe.

Thank you both for joining us. I want to try to understand this case before everybody jumps to a verdict here on television. And I think, in fairness, we ought to take a look at a couple things.

Here is what is being portrayed by NBC as an example of what could be called, you know, probative. It could suggest there was a deal here to use money coming from, in this case, Bunny Mellon, the wealthy heiress, to basically help out, to keep quiet that affair. Here it is, the voicemail message that Edwards left for aide—campaign aide Andrew Young. Let‘s listen.

(BEGIN AUDIO CLIP)

JOHN EDWARDS (D-NC), PRESIDENTIAL CANDIDATE: Andrew, it‘s John. I had a wonderful conversation, a long and wonderful conversation with Bunny. I think we can completely count on her. I just wanted you to hear that, and once again, to tell you I love you. I really love you, Andrew.

(END AUDIO CLIP)

MATTHEWS: Well, that is what looks to be trouble. Now, here he is defending himself on “Nightline,” saying that he didn‘t do what he‘s accused of doing, at least the way he‘s describing what the charge is. He doesn‘t know what the charge is yet.

EDWARDS: I‘ve never paid a dime of money to any of the people that are involved. I‘ve never asked anybody to pay a dime of money, never been told that any money‘s been paid. Nothing has been done at my request.

(END VIDEO CLIP)

MATTHEWS: So Joan, here‘s the question. And I don‘t like original

uses of laws. I like the way they were originally used. If there‘s a new

kind of use of the law, it better be really important. They‘re saying

here, apparently, the prosecutors—we were trying to figure this out, NBC

I‘m benefiting from NBC‘s reporting by Lisa Myers.

Apparently, they‘re saying that this money given by the wealthy heiress, Bunny Mellon, Rachel Mellon, was basically a campaign contribution because it helped them get out of this kerfuffle, this embarrassing thing that would have hurt his campaign and killed his image. They‘re defining that as a campaign contributions, even though she apparently paid gift tax on this, apparently saw it as a personal gift to a guy in trouble, who said, I got this personal problem I need help with. She didn‘t think it was a campaign contribution, according to what I‘ve been able to figure out.

Is it a campaign violation? Is this guy criminal or not, do you think? What‘s going on?

JOAN WALSH, SALON.COM: I think it‘s very confusing. I mean, this is

we are in an area of law where, you know, we just don‘t know whether you can say that that was knowingly—that that really was a campaign contribution and that he knowingly used it to cover up this affair. We‘re just not there yet, Chris, with the evidence that we have.

MATTHEWS: You know, (INAUDIBLE) your thoughts, Richard. You‘re smart on these campaign issues. What is this? Is this a crime or some original prosecution here, original—creative prosecution?

RICHARD WOLFFE, MSNBC POLITICAL ANALYST: I don‘t know that it depends on what the donor thought it was going to be used for. If the campaign ran it through campaign accounts and they cut checks on campaign—through campaign sources, and it was spent for personal use—you don‘t get much more personal than trying to look after your mistress...

MATTHEWS: Yes.

WALSH: Right.

WOLFFE: ... then I don‘t know that he has a leg to stand on. I mean, you...

(CROSSTALK)

MATTHEWS: Well, wait a minute. Let me ask you, is it a campaign contribution if it was clearly, first of all, well beyond the $5,000 you‘re allowed to give as federal money? So, the idea that this was ever given as a campaign contribution, if the person giving the money was paying taxes on it as a personal gift—when does it become a campaign contribution, I guess, is the question.

WOLFFE: Look, I think that‘s great question, but if the campaign was spending the money as part of a cover-up because he didn‘t want to run it through his personal accounts...

MATTHEWS: Yes, but that‘s not a campaign expense. That‘s a cover-up to cover up...

WOLFFE: No, clearly, it‘s not. Right. Right. And that‘s the problem. Where—at what point did this stuff merge? It seems, it seems early on that she was, that the mistress was wrapped into this campaign, first of all, for this videography, but, later on, it became much more personal.

WOLFFE: There‘s supposed to be this clear division between campaign spending and personal spending.

MATTHEWS: I understand.

WOLFFE: And, again, I don‘t—I don‘t think it matter about the intent of the donor. And even in this case, you know, I guess the Edwards defense has been he didn‘t order anything, or he didn‘t know what it was being used for.

It seems like they have enough statements from him or e-mails or voice-mails to say that he did actually know what was going on. So...

MATTHEWS: OK, here is question for you, Richard, then Joan, a bigger question. Is this how the federal prosecutor should be using their time, to go through a case that looks like an original use of the law that involves a bit of a stretch, that involves perhaps a failed prosecution?

They are going to video have to prove that John Edwards knew he was doing it, not just, I love you, buddy, and buddy is good for something. They are going to prove he fingered the money and said spend it on this cover up-and then they have to declare it as a campaign event. They have to prove a lot of things here to win a prosecution.

Is this worth federal time or should they be going after murderers or somebody who has committed something really serious in this country? Your thoughts. A judgment call.

WOLFFE: I think public corruption is an extremely serious offense, and there needs to be a clear signal sent that it is not acceptable.

I—you know, you could have made the same argument about the Valerie Plame affair. And people tried say that. They said, you know, no one died and what was the harm involved here?

MATTHEWS: Well, they outed a federal—they outed a federal undercover agent. I would say harm was done. That‘s a clear case.

(CROSSTALK)

WALSH: Let‘s steer clear of Valerie Plame, because that is a clearer case.

But I agree with Richard that we are not talking about a dinner here or there. We are talking about up to $1 million in campaign money. That is real money. And so, if this case can be proven, I think it‘s relevant.

I‘m not a person who thinks that people‘s private lives should be dragged into this, but when you start spending campaign resources to cover up the affair, if he did...

MATTHEWS: Is it a campaign resource?

WALSH: Well, you know, they are not stupid people. I‘m not going to

I will give him the benefit of the doubt, because that‘s—our country has a presumption of innocence, but they are not stupid people if they can‘t see some way that this then commingled with campaign funds.

MATTHEWS: OK. Let me try this—let me try this—let me try this by both of you. Suppose you are running for office, and you have got a tremendous embarrassment, you have had an affair with somebody, and just like this case—forget all the details, just this simple detail.

You have had an embarrassing affair. You don‘t want your wife to know about it and you don‘t want the voters to know about it, certainly. You don‘t want anybody to know about it. So, you go to somebody who has been helpful to you in the campaign, and say, by the way, I have got a personal problem here. Give me some money to shut this thing up.

Is that a violation of the law, Richard and then Joan? Is what I just described a violation of the law?

WOLFFE: No.

(CROSSTALK)

MATTHEWS: Because that‘s what they are saying it is. That is the—that is the Edwards‘ defense.

WOLFFE: If he got a benefactor or friend to try and deal with his mistress separately, put them up in their mansion, that‘s not a campaign violation. Having an affair is not a crime.

MATTHEWS: Right.

WOLFFE: It may be embarrassing. It may kill your political career. But if they tried to launder that money through the campaign, then that‘s where you get into this criminal situation.

MATTHEWS: OK. You disagree with the prosecutors, because the prosecutors are saying any time you diminish a negative influence on your image, if you are just trying to keep quiet something that is going hurt your image in the campaign, that is a campaign expense, per se.

WALSH: Well, yes. If that is ultimately the case that they bring—you know, we‘re all at a disadvantage here because we don‘t—we don‘t know exactly what the case is or what the ultimate argument is going to be.

MATTHEWS: That is a hell of a case. That is a hell of an argument.

Excuse me. That is a hell of an argument. That‘s a hell of an argument.

WOLFFE: Yes.

MATTHEWS: Anything that makes you look better is a campaign expense. Anything that stops you from looking worse is a campaign expense. That is such an umbrella.

WALSH: No, of course.

(CROSSTALK)

WALSH: Your kid‘s SAT tutoring should be—you know, could be considered a campaign expense if they got into a good college.

WOLFFE: Or Oprah endorsing you.

MATTHEWS: Yes. I don‘t know. I just want law to be enforced. If this guy‘s sleazy, fine. Let‘s all agree he‘s sleazy. If he committed a federal felony, let‘s agree on that.

MATTHEWS: I just don‘t—every time I see Texas or some of these states involved in prosecutions, I begin to think that the U.S. attorney just wants to run for the same office he is going after, just a thought. I see it too many times.

Thank you, Joan.

Thank you, Richard.

I don‘t like politicization of politics—I‘m sorry—illegalization of politics.

Up next: Mitt Romney flip-flopped again. He is not trying to take credit for saving the auto industry after he proposed letting the auto industry die. Boy, this guy flip-flops like the best in the circus. Anyway, that‘s next in the “Sideshow.”

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Back to HARDBALL. Time for the “Sideshow.”

First up, out of sync? In case you missed it, watch what happened last night during President Obama‘s toast to Queen Elizabeth.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: To Her Majesty, the queen, to the vitality of the special relationship between our peoples, and, in the words of Shakespeare, to this blessed plot, this earth, this realm, this England, to the queen.

(MUSIC)

(END VIDEO CLIP)

MATTHEWS: Well, she is the queen. This morning, President Obama joked about the orchestra miscue with Deputy Prime Minister Nick Clegg.

(BEGIN VIDEO CLIP)

NICK CLEGG, BRITISH DEPUTY PRIME MINISTER: I noticed it. I thought you did exactly the right thing.

OBAMA: I thought that it was like out of the movies, where sort of the soundtrack kind of comes in.

MATTHEWS: Well, actually, I think the orchestra was a bit off in its timing. Maybe that‘s why the president seemed terribly hesitant with that line from Shakespeare.

Next up: a big-time Romney reversal. It‘s been a good week for American automakers. This is wonderful news. Chrysler repaid almost all of its bailout loans to the federal government, almost all of it. GM announced it will be hiring 2,500 workers in the Detroit area alone, headlines no one thought possible just two years ago.

In fact, the president‘s auto rescue plan has been such a huge success, that even Mitt Romney is now trying to take credit for it. His spokesman said yesterday—quote—“Mitt Romney had the idea first. You have to acknowledge that. He was advocating for a course of action that, actually, that eventually the Obama administration adopted.”

Oh, really? Well, Romney actually came up with the idea for the president‘s auto plan? Well, here‘s a reality check from the Democratic National Committee.

(BEGIN VIDEO CLIP, DEMOCRATIC NATIONAL COMMITTEE AD)

JUDY WOODRUFF, PBS: The crisis in the auto industry, what should be done there?

UNIDENTIFIED FEMALE: Should the federal government bail out the auto industry? Mitt Romney, former Massachusetts governor and former Republican candidate for president, says, absolutely not.

MITT ROMNEY ®, FORMER MASSACHUSETTS GOVERNOR: There‘s no question but that, if you just write a check, that you are going to see these companies go out of business, ultimately.

MATT LAUER, CO-HOST, “THE TODAY SHOW”: You said—quote—“If General Motors, Ford and Chrysler get the bailout that their chief executive asked for yesterday, you can kiss the American automotive industry goodbye.”

MATTHEWS: Well, I think that‘s right up there with “Let them eat cake.” This guy can‘t get it straight.

Now for tonight‘s “Big Number.”

Think a bipartisan deal on the debt will be easy? Well, think again. Anti-tax fanatic Grover Norquist—there is a name for you, Grover Norquist—pressures incoming lawmakers to pledge to never, ever raise taxes.

Out of the 287 Republicans now serving in Congress, how many do you

think have signed the Norquist pledge? Two hundred and seventy-three,

almost every one of them. Two hundred and seventy-three Republicans in

Congress have their hands signed on tax increases—tonight‘s “Big Number”

Grover Norquist in power.

Up next: Newt Gingrich‘s half-million dollar debt at Tiffany‘s. Newt was already off on a bad start. This is making it worse. That‘s ahead.

Stocks lost altitude heading into the close, but they did manage to eke out some modest gains. The Dow Jones industrial average added 38 points. The S&P 500 tacked on four, and the Nasdaq was higher by a little more than 15.

Investors were focused on oil and gasoline supplies today. We had a sharp drop in heating oil and diesel supplies. That trumped a leveling off of gasoline inventories.

NEWT GINGRICH ®, Presidential Candidate: All of us have wrestled with two problems: How do we maximize individual freedom and how do we make sure that people have some responsibility for their debts?

(END VIDEO CLIP)

MATTHEWS: “People have some responsibility for their debts”—what a great call by Newt Gingrich.

Welcome back to HARDBALL.

Newt Gingrich was talking there about a health care mandate, but he certainly wrestled this week with the debts of a different sort. Here he is once again with Bob Schieffer on “Face the Nation” last Sunday. Let‘s listen to this historic conversation.

(BEGIN VIDEO CLIP, “FACE THE NATION”)

BOB SCHIEFFER, HOST, “FACE THE NATION”: You owned between $250,000 and half-million dollars a jewelry company.

What was that about, Mr. Speaker?

GINGRICH: Well, first of all, it is about obeying the law.

SCHIEFFER: Did you owe a half-million dollars to a jewelry company at one point?

MATTHEWS: You know, we have spent our lives trying to figure out politicians and who they really are.

DAVID CORN, MSNBC POLITICAL ANALYST: And every once in a while, we get a clue as who they are by something like a $5,000 haircut or something.

CORN: Yes.

MATTHEWS: Here‘s a guy that, according to his wife‘s financial statement, owed—not had a line of credit—owed...

CORN: Right.

MATTHEWS: ... a quarter-million to a half million dollars for jewelry.

Subsequent to that, “The New York Times” has shown the incredible jewelry, still doesn‘t add up to a half-million bucks. What is going on here with this confession of incredible indebtedness to a jewelry company?

STEELE: ... I would be more concerned if we were talking about the fact that he, you know, skipped out on the debt and didn‘t pay the debt.

(LAUGHTER)

STEELE: I mean, you know, he incurred the debt at a time when he was a private citizen. Through his affairs and business, he earned an income. He spent his money. Why are we having this conversation?

(CROSSTALK)

MATTHEWS: Well, let‘s explain this further.

David Corn?

CORN: Politicians spend a lot of their waking hours trying to figure out how to cut through the clutter and connect with people and get their messages out.

Every once in a while, they do it unintentionally, with a $400 haircut. Or remember when the first President Bush seemed to be amazed at a price scanner and a refrigerator? These are like watercooler moments, when people say, oh, that tells me something about the guy.

Now, you are right. He was making a lot of money at the time. He incurred this debt. But the way he has—he has gone about explaining it, it certainly is a question that you want to ask.

MATTHEWS: But listed as a liability on his—liability of a half million dollars. Go.

DAVID CORN, MOTHER JONES: He had a tab at Tiffany‘s that went up --

MATTHEWS: Ran up.

CORN: Ran up between a quarter of a million and a half a million.

MATTHEWS: A tab.

STEELE: He paid off.

CORN: It was listed also for two years running. So, eventually, yes, it was --

STEELE: They paid off.

MATTHEWS: OK, let‘s go to relevant here. To quote “The New York Times” headline today, “All that glitters may redefine Gingrich.” Let me tell you why because I think the line of argument, I will follow up on that.

MATTHEWS: Here‘s Newt last week in the House over that bill, because, by the way, your House did approve it, except four Republican, voted to kill and remove Medicare as an entitlement program and move on. This is what you‘re doing here now for a living here, Michael. You can run from it.

(CROSSTALK)

MATTHEWS: Let‘s listen.

(BEGIN VIDEO CLIPS)

NEWT GINGRICH ®, PRESIDENTIAL CANDIDATE: I don‘t think right-wing social engineering is any more desirable than left wing social engineering. So, there are things you can do to improve Medicare.

DAVID GREGORY, NBC NEWS: But not what Paul Ryan is suggesting which is completely changing Medicare?

GINGRICH: I think that that is too big a jump.

I made a mistake and I called Paul Ryan today, who is a very close, personal friend, and I said that. The fact is that I have supported what Ryan‘s tried do in the budget.

RUSH LIMBAUGH, RADIO TALK SHOW HOST: Well, then what did you apologize to him about?

GINGRICH: Because it was interpreted in a way which was causing trouble, which he doesn‘t need or deserve, and was causing the House Republicans trouble.

(END VIDEO CLIPS)

MATTHEWS: So, on Sunday, he disagreed with Paul Ryan because he knew it was a killer issue, that proved to be a killer issue in New York 26 yesterday, last night. And then he said he wasn‘t, then he said, no, on Monday, “I‘m with Paul Ryan,” and then on Tuesday, called to apologize. On Wednesday or Thursday, he said, “I wasn‘t talking about Paul Ryan.”

This guy is skating all over the rink here. Your thoughts? Are you with him on Sunday or with him on Monday? When are you with him? Are you with him when he was against Ryan or when he was for Ryan, apologizing to Ryan, or he was saying I wasn‘t talking about Ryan?

(CROSSTALK)

STEELE: No. No, no, I will say this—the one thing that I do and I did take away from the Sunday appearance. Now, we can talk about --

STEELE: Newt was being consistent with what Newt has been saying the last 16 years on this issue when he was speaker of the House and brought this issue up on Medicare and how he talked about, you know, making an individual option. So, I think in his mind, what was answering was consistent can with what --

MATTHEWS: Well, he said make it voluntary.

(CROSSTALK)

MATTHEWS: Here he is making his stance, by the way, that people are required to buy health care. Here again, he‘s been jumping like a jumping bean here. Here he was in ‘93. In ‘39, he was for an individual requirement. He was then for it on Sunday when he was interviewed by David Gregory, and then he switched again on Monday again.

Here he is. We‘re going to watch these Sunday performances trying to keep up with him. Let‘s listen.

(BEGIN VIDEO CLIPS)

GINGRICH: I am for people, individuals—exactly like automobile insurance—individuals, having health insurance and being required to have health insurance and I am prepared to vote for a voucher system which will give individuals on a sliding scale a government subsidy so ensure that everyone as individuals have health insurance.

I have said consistently, we ought to have some requirement you either have health insurance or you post a bond, or in some way, you indicate that you are going to be held accountable.

UNIDENTIFIED MALE: You do conceive you have said in the past that you did?

GINGRICH: Sure. Heritage Foundation has said they were for it at one time.

(END VIDEO CLIPS)

MATTHEWS: This guy is blowing the (INAUDIBLE) here. You can‘t keep him—Michael, which time were you for him? Were you for him when he was supporting the individual mandate twice or when he turned tail on it with Schieffer there?

STEELE: My view of it is, let me—first, I‘ll say --

MATTHEWS: You‘re defending him.

STEELE: No, no. No, I‘m not defending him. I‘m not trying to defend anybody. They have to take care of that themselves.

I think the bottom line is the Ryan plan is a step to get us into the discussion about what we need to do with what is a serious problem for the country. Now, as you go through this process, our presidential candidates, each of them will come out with their plan on how to deal with this. It may or may not be the Ryan plan or some variation.

MATTHEWS: Would you tell a candidate for Congress running this year for next year to sport Ryan plan and be for phasing out Medicare at the age of people above 65?

STEELE: But, see? But that‘s the problem. This is not about phasing out Medicare. This is about reforming the system.

CORN: No. No. No.

STEELE: Hold on, let me make this one point? Can I just make this one point and I will be quiet. Make this one point --

CORN: I bet you won‘t. But go ahead.

STEELE: You are talking about eliminating Medicare and that is not

what the Ryan plan does. What it does is puts in a premium support that

was

(CROSSTALK)

MATTHEWS: Michael Steele for the defense. Thank you. He‘s defended Newt up until about two minutes ago. Thank you, David Corn.

It‘s good to have you aboard. Thank you.

Some breaking news: the Senate has voted tonight against the Republican budget plan that ends Medicare as we know it. The vote was 57 against to 40 in favor. Scott Brown, Olympia Snowe, Susan Collins, Lisa Murkowski and Rand Paul were the Republicans who joined the Democrats in voting against the budget plan that Michael Steele supports.

Up next, the scathing new book about Sarah Palin written by one of her former political aides—this is going to be interesting. We‘re going to talk to the book‘s author, her former aide, Frank Bailey, when we return in just a minute.

This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Well, sad news to report. Our friend and colleague Mark Haines died last night. You know him from television, from CNBC. He was the founding anchor of “Squawk Box” on CNBC.

There he is, joined the cable network back in 1989. That‘s a young picture of him. He was popular, you can say that, and well-loved host, you can say that again, who covered everything in the business world for over 20 years.

Mark Haines will be missed. Look at him.

(COMMERCIAL BREAK)

MATTHEWS: We are back.

A new tell-all book by a former Sarah Palin staffer details her rise from a gubernatorial candidate to a multimillion dollar national political figure. And it takes us inside a chaotic and cutthroat life up in Alaska.

That staffer, Frank Bailey, is the author of “Blind Allegiance to Sarah Palin: A Memoir of Our Tumultuous Years.”

MATTHEWS: Tell us about this story about how the former governor would write letter to the editor about how great she was and sign it with someone else‘s name.

BAILEY: Yes. You know, that stuff actually happened before she became governor. And she would actually draft these glowing letters about herself and get volunteers to sign them and post them in the newspaper to look like they were coming from other folks. She was very—you know, in the book, we talk about all of the ways that she really did everything she could to try to paint herself in a publicly popular way there for the Alaskan public.

MATTHEWS: Well, let me ask you about—did she actually get people to read the letters or just lend her name so that it looked like they had actually written? Did they actually ever get to look at the letters or what? What was the format here? How it worked?

BAILEY: I believe they were sent to the person, and the one we actually published in the book, we didn‘t list the name of the person who posted it. But the letter was written by Sarah, and actually sent to the person and then submitted into the local papers up there in Alaska and published.

MATTHEWS: Well, here‘s one of them you have on your book. “Dear editor,” it‘s signed by somebody else, “it‘s been a pleasure watching our life-long Alaskan gal, Sarah Palin, campaign for governor these past six months. I am impressed with her leadership skills, experience, ethics and energy. And I‘m most impressed with how she communicates her message that is connecting with so many Alaskans.”

That‘s how she‘s (INAUDIBLE), she‘s writing letters from you saying how great she is.

Let me ask you about the real—I guess the question we always ask is what they really like. It‘s what Jack Kennedy said originally of books about people.

Is Sarah Palin different than this sort of glittery person that comes out with the nice hand and looks attractive and upbeat and positive, and loving the masses? What‘s—there she is. She‘s very good on stage. She makes a great appearance, and that‘s really—she‘s show business.

What she‘s like in the back room?

BAILEY: You know, in the back room, we paint a picture really of a journey, you know, starting in 2005 where she was very down to earth and a very—just regular Alaskan, and a regular person. And, you know, I think she kind of got that taste for power, you know, getting into the governor‘s office. And these minor criticisms, these sleights, you know, people would criticize her and she‘d have us actually transcribing and recording online radio shows to, you know, try to find callers to call back in and prop up her image.

She‘s very, very thin-skinned. We detail that specifically, a lot of times using her own words in the book.

MATTHEWS: You must have watched that Katie Couric interview with her dozens of times. I would if I was working with her. What were you thinking when you first saw Katie Couric asks her a pretty open question, what do you read? I don‘t think it‘s a trick question. I think it helped Katie‘s career obviously because it showed that she asked the right question, it nailed this person.

What did you think when you hear about that? When you watch it?

BAILEY: It was painful for me to watch in the position that I was in at that time, Chris. I talk about it in the book where it was frustrating, because she‘s not dumb. She is smart. She does read. She reads a lot.

MATTHEWS: Well, what did she read? Why wouldn‘t she answer the question?

BAILEY: That‘s a great question. I mean, she reads all about Alaskan, you know, business and all this stuff. But see, when Katie asked that question, my assessment is that she didn‘t want to seem too Alaskan. She didn‘t want to be seen too much who she was.

MATTHEWS: Why not?

BAILEY: She wanted to be bigger than that. She wanted actually, you know, be someone that could actually run this country, if need be. And to me, I thought that was a fault. Just be yourself. Be who you are.

MATTHEWS: I mean, she wouldn‘t answer “USA Today” or Alaskan city newspaper, or she wanted to sound like she read “The Economist”? What, the London financial news? Is that what she was afraid she wouldn‘t look like?

BAILEY: Right, because she focused on Alaska business, which a governor should.

MATTHEWS: I think she made a big business mistake, obviously. It‘s easy to say now.

MATTHEWS: The book is called “Blind Allegiance.” Frank Bailey, thanks for coming on HARDBALL. Come back again.

When we return, “Let Me Finish” with breakfast, lunch and dinner at Tiffany‘s for Newt Gingrich.

You‘re watching HARDBALL, only MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: “Let Me Finish” tonight with the great way we identify with politicians. The great ones know the power of icons. Lincoln was the rail splitter. Teddy Roosevelt knew that power of the rough riders. FDR of that cigarette of his pointing upwards once said, “I come from regular people, the second that I fought for our country, the third, we‘ve got nothing to fear, just look at me.”

So what does it mean when a guy running for president says he‘s in hock for maybe half a million bucks to a jewelry company? It says, hey, this guy doesn‘t just have breakfast at Tiffany‘s, but lunch, supper and midnight snack. He damn near grazes at the place.

There‘s something fast and loose about this kind of behavior, don‘t you think? It says something about the way you spend your money. Some people give up steaks and nightclubs and great clothes, not to even to mention a half million in jewelry on the cuff for a lifetime so that their kids can live better. Even people with money must wonder what‘s going on here between Newt Gingrich and the people behind the counter at Tiffany‘s. Fast and loose—that‘s what it looks like, yes.

Put it on the account. Just get it over to my office by 6:00. Yes, the diamond necklace, the one she said she liked the other day. Can you get it there by then? Great.

Last week, he said he didn‘t like the Republican plan to get rid of Medicare. That was Sunday. On Monday, he said he changed his mind. What he said on “Meet the Press” stays on “Meet the Press,” I guess. On Tuesday, he was downright apologizing for what he said.

Newt is like this. He goes and attacks the president for requires people to get health insurance, then he says that he believes people should be required to get health insurance. Then it turns out that‘s been his position since the early ‘90s.

So, where is this guy moored down to? Is he all over the place on issues on buying jewelry on time? Just get it there by 6:00, whatever she wants, just get it there by 6:00.

Newt Gingrich, he‘s so busy saying and doing what he thinks will make us happy this minute that he can keep track of what he promised to do a minute ago.

I agree with “The New York Times” this week. This half million bill from Tiffany‘s is going to stick. It sort of clears up exactly who Newt Gingrich is. He‘ll say or do whatever that will get him through the night. He‘s the guy who buys a lot of jewelry, buckets of it, just to keep things humming.

That‘s HARDBALL for now. Thanks for being with us.

More politics ahead with Cenk Uygur.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.